Presidents often crave a period of great challenges that can etch their names in history. Barack Obama stands on the precipice of such a time.

When sworn in Tuesday as the nation’s 44th president, he’ll inherit the worst economy in the post-World War II era, with no modern model to help steward its recovery.

The classic tools used by government to overcome recessions have been largely ineffectual against such a swift and massive decline. That will require experimentation with new tools, even as Obama reaches back to the Great Depression for ideas that could still work in today’s global economy.

His task is further complicated by timing.

The onset of the Baby Boomer retirements means Obama, unlike his predecessors, can’t put off dealing with the dwindling resources for Social Security and Medicare, or else he risks allowing the two policy pillars of the Democratic Party to collapse.

And when a recovery finally begins to emerge, the incoming Obama administration will be confronted with trillion-dollar deficits, inflationary risks and financial markets transformed by the crisis and untested in a normal economy.

“There will be no respite for him. He’s going to have to go from one big problem to an even bigger one. This is what makes great presidents,” said Mark Zandi, chief economist and co-founder of Moody’s Economy.com.

Obama’s decision to engage Congress before his Inauguration is driven by the economic deterioration since he won the election.

More than a third of the 2.6 million people who lost their jobs last year did so in the two months after the Nov. 4 election. Housing foreclosures rose 17 percent in December.

Governors are reporting billions of dollars in unanticipated revenue losses. Major layoffs of state employees seem inevitable.

Bank of America’s appeal for additional government cash and the just-announced breakup of Citibank are reminders that the financial sector, which seemed to stabilize after an infusion of government cash, remains perilous.

In speeches and action, Obama has offered the outline of a complex and sweeping recovery plan, but none of it will be easy to achieve. Each piece will involve political fights and a drawdown on his wealth of political capital.

Obama already cashed some of it to win Senate approval to release the second $350 billion installment of the $700 billion Troubled Assets Relief Program.

He will have to spend even more in the next few weeks as he pushes through his own $825 billion economic stimulus package, which has some Republicans aghast at its size.

Passage of both measures is essential, economists say, for two reasons: Investors and forecasters have already assumed both will pass, and a swift infusion of government cash is the only way to keep the economy functioning even as it shrinks.

“It really doesn’t matter what they spend it on. They just need to spend it so someone gets income,” said Bill Hampel, chief economist for the Credit Union National Association. “It would be nice if they spent it on useful things, but that doesn’t really matter. They just need to start spending money, quickly.”

Approval of the stimulus and the TARP funds is likely to be the easiest test for the new president.

His administration must also resolve the underlying problem: a housing bubble collapse that nearly wiped out the most muscular financial markets in the world.

Bush instituted a few initiatives to combat the problem, but they were too small and too late to contain it. Obama must figure out a way to make those programs work and add his own to the mix.

A core conundrum in resolving the foreclosure crisis is deciding who’ll pay for it.

Should the taxpayers buy up the banks’ bad bets and absorb the losses? If a mortgage is reduced so a family can keep a home, who covers the costs to make the original lender whole? Taxpayers? Lending companies? A combination?

Whatever course Obama takes on those questions is sure to prompt stiff resistance. A Democratic congressional proposal to give bankruptcy judges more authority to rewrite mortgages from the bench has already raised tension on Capitol Hill.

Business leaders loathe the provision because it could wreak havoc with private market transactions — and would set a precedent that could affect other sectors. They have vowed to work with Senate Republicans to block it.

Senate Democrats are considering slipping the bankruptcy provision into the stimulus package, which could make it harder for Republicans to block the change but also would create another hurdle for Obama in getting the stimulus measure approved by the Senate.

Another major plank in the new president’s recovery plan is revamping the federal agencies that oversee the financial markets to try to prevent a similar credit crisis down the road.

While all sides agree such reform is necessary, an overhaul of established bureaucracies and creation of new ones is sure to create jurisdictional fights among congressional committee chairmen and intense lobbying from the affected businesses.

In addition, Martin B. Evans, an economics professor at Georgetown University, says lawmakers and Obama haven’t seriously engaged in a conversation about what the regulatory landscape should look like when they’re done.

“What are your principles? What do you want it to do?” Evans asked. “We aren’t even at the starting gate of that discussion.”

While they’re debating that, the White House and Congress also must figure out how to extract the government from the private market once a recovery begins.

Finally, Obama has pledged to reform Social Security and Medicare. Past presidents have vowed the same and failed. But the pressure for Obama to act will be intense.

Medicare, the federal health care program for the elderly, is projected to become insolvent in 2019, and Social Security will begin paying out less revenue than it collects in 2011, during Obama’s first term.

On the campaign trail, Obama proposed to make Social Security more solvent by having the wealthy pay more payroll taxes. He would exempt from the tax hike those making less than $250,000.

Medicare is a more complicated fix because the solution lies in a broader cost-cutting overhaul of the nation’s health care system.

Success in entitlement reform, though, could make Obama’s last job — lowering the deficit — easier.

According to John Dearie of the Financial Services Forum, it took the government 210 years to accrue the amount of external debt that it’s built in the past three months.

“There will be significant consequences to that in the international capital markets, the position of the United States and the position of the dollar,” he predicted.

But Obama can’t stop all the pain, and economists forecast much more ahead.

Most don’t expect to see any significant signs of a turnaround until the end of this next year — and it could be even later if the housing market continues to spiral downward.

Obama has tried to measure expectations. “Things will get worse before they get better,” he said again last week. “I want everybody to be realistic about this.”

Still, Hampel sees a silver lining. “The good news is ... that three years from now, it is almost inconceivable that the economy won’t look a whole lot better than it looks now,” he said.